Mechel announces commissioning of new mining machinery

JSC Mechel announces that the Company has commissioned new modern backhoe excavators at its iron ore mining subsidiary, Korshunov Mining Plant, and at deposits of its nickel mining subsidiary, Southern Urals Nickel Plant. The new machines will increase Mechel’s efficiency of iron and nickel ore mining while reducing production costs.

The Liebherr excavator, with a nine cubic meter bucket, is installed at the Korshunov open pit mine of Korshunov Mining Plant to utilize its design for mining iron ore at lower levels in
the open cast mining method. The Liebherr excavator is designed for excavating ore in confined spaces from the bottom of the pit, leading to higher efficiency and fewer losses of iron ore at greater depths in the mine. In addition, Mechel will use the new excavator to improve work conditions for mining machinery, such as dump trucks, drilling units and bulldozers, saving material resources in the process. The new machines will enable decommissioning of two aged excavators and should allow the Company to increase annual productivity by 30% in ore excavation.

The Komatsu brand excavator, with a four cubic meter bucket, is put into operation at the Sakharinsk mine of Southern Urals Nickel Plant. A similar machine will be commissioned at the Buruktal mine this autumn. The new machines are designed for efficient excavation of nickeliferous ores at lower levels in the mine. They are distinguished by enhanced maneuvering capabilities, and add to the machinery already available at the mines.

The total cost of the new excavators is approximately RUR167.0 mln (approximately $6.5 mln).

The new machines were commissioned in line with the technical re-equipment program of Mechel’s mining subsidiaries. The renewal of the mining subsidiaries’ equipment is part of
Mechel\'s long-term capital expenditure program, aimed at increasing iron and nickel ore output and increasing coal output to 25 mln tn in 2010. As previously announced, investments
in developing the Company’s mining segment will total approximately $1.2 bln in the period from 2007 to 2011.

Mechel significantly renewed the technical basis of its mining assets during the first half of 2007: from June to July, two other Liebherr excavators were commissioned at the Krasnogorsk and Sibirginsk open pit mines of Southern Kuzbass Coal Company. Mechel plans to commission two more excavators at the Olzherassk and Tomusinsk open pit mines of Southern Kuzbass  before the end of this year.